sp 500 daily outlook wed 09 mar 2016 pull back is likely to have ended above 197063 potential final

(Click to enlarge charts)

What happened yesterday/earlier

In our short-term daily outlook/strategy published yesterday, 08 March 2016 (please click here for a recap), we have stated that the U.S. SP 500 Index (proxy for the S&P 500 futures) is likely to have a further dip towards the key 1970/63 medium-term pivotal support before a potential last push up   occurs.

The Index has indeed shaped a decline to print a low of 1977 (close to the upper limit of the pivotal support of 1970) in the late U.S. session.

Key elements

• Yesterday’s decline in price action has tested and staged a rebound from the lower limit of the bearish “Ascending Wedge” which is also the lower boundary of the ascending channel in place since the start of the on-going countertrend rally from 11 February 2016 low of 1807.
• The 4 hour Stochastic oscillator has just exited from its oversold and still has room for further potential upside before reaching its extreme overbought level. This observation suggests that the downside momentum of yesterday’s decline has waned and a possible upside reversal in price action is round the corner.
• The upper limit of the bearish ‘Ascending Wedge” stands at the 2020/30 zone which confluences with a Fibonacci cluster and the trendline resistance from 02 December 2015 high (details as per highlighted in our latest weekly outlook/strategy over here).

Key levels (1 to 3 days)

Pivot (key support): 1970/63

Resistances: 2009 & 2020/30

Next support: 1922

Conclusion

The pull-back seen in yesterday’s price action is likely to have ended just above the 1970/63 pivotal support and the Index is likely in the midst of undergoing its potential final upleg (wave e of c/ (a)) to retest last Friday high at 2009 in the first step.

On the flipside, a break below the 1970/63 pivotal support is likely to invalidate the final push up scenario to kickstart a potential multi-weeks decline towards the next support at 1922 in the first round of downside movement.

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